US banks braced for large deposit outflows

CNBC/Financial Times ^ | 31 Jul 2014 | Tracy Alloway and Camilla Hall

[Lorianne]

US banks are steeling themselves for the possibility of losing as much as $1tn in deposits as the Federal Reserve reverses its emergency economic policies and raises interest rates.

JPMorgan Chase, the biggest US bank by deposits, has estimated that money funds may withdraw $100bn in deposits in the second half of next year as the Fed uses a new tool to help wind down its asset purchase programme and normalise rates.

Other banks including Citigroup, Bank of New York Mellon and PNC Financial Services have also said they are trying to gauge the potential effect of the Fed's exit on institutional or retail depositors who might choose to switch to higher interest accounts or investments.

[CIB-173RDABN]

When people get almost zero interest on their money, they will look for another place to put their money.

At the rate banks are paying, you are almost better putting your money in coffee cans and bury it in the back yard. At least your back yard will not go bankrupt.

[grania]

How will the banks ever survive if they don’t get to use savers’ money for free?

[Kozak]

They don’t need our money. They get 800 billion Bernanke/Yellen Bucks to play with every year....

[alpo]

And they don’t have to pay it back.

[maine yankee]

Here in Maine we are seeing relatively wealthy people coming up to buy pieces of land. Twenty to a hundred acre pieces.

[KTM rider]

The Federal Reserve is like a gigantic monster movie sized bloated tick full of Lyme disease sucking the life out of America

[Stentor]

Here in Maine we are seeing relatively wealthy people coming up to buy pieces of land. Twenty to a hundred acre pieces.

Should be funny watching them try to take possession when the SHTF.

[G Larry]

Where did these co-authors go to school?

“deposit outflow”???

Ladies!

They’re called WITHDRAWALS!!!!

[GeronL]

lol

[SVTCobra03]

Here in Maine we are seeing relatively wealthy people coming up to buy pieces of land. Twenty to a hundred acre pieces.

Wealthy people have historically survived economic collapses by investing in land, gold and art.

[SVTCobra03]

Should be funny watching them try to take possession when the SHTF.

Maybe they plan to build prepper bunkers before the SHTF.

[upchuck]

Just what we need: a new tool. As if the current tools haven't caused havoc already.

From the article:

Banks also face the retreat of large institutional deposits as the Fed uses a new tool known as a "reverse repo facility," or RRP, to stage its retreat. The RRP effectively allows non-banks such as money funds to have reserve accounts at the Fed.

Huh? To what end?

Why does everything the Fed does have the sound and feel of smoke and mirrors? Who thinks up this stuff? Denver pot heads?

[rbg81]

Maybe I’m missing something, but I think if interest rates go up, people will put their $$ back in the bank. But to do that, they would take it out of the Stock market (which, I suspect, is why they are really panicking).

[eyeamok]

thats not the way banks work

[MaxMax]

Are the Obamanites getting ready to toss the economy into the crapper because
2014 will be their bad election year? They'll get to blame it on the Repubs.

It's going to happen anyway but being forced will make it worse.

[familyop]

"Here in Maine we are seeing relatively wealthy people coming up to buy pieces of land. Twenty to a hundred acre pieces."

They're retarded then. With the uglier parts of the default process ahead, real estate is going to drop like a rock and stay that way for decades. Such people, on average, are also not likely to do any work to make good use of vacant land.

[Lorianne]

But they could hire people to make good use of the land. We could be seeing a return to sharecropping.

Owning land is still a better deal than holding worthless paper or certificates. But I agree, you have to do something productive with the land, not just hold it.

[bert]

They are going to Maine to get out of the riots

[Stentor]

Maybe they plan to build prepper bunkers before the SHTF.

I know that's the plan. Best build some bridges with the locals too.